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Delta overcame rising oil prices by hiking fares

Posted at 6:34 AM, Oct 11, 2018
and last updated 2018-10-11 10:07:27-04

Hurricane Florence and higher fuel prices proved no big deal for Delta Air Lines. Profit grew after the company raised fares and sold more seats on its planes.

The airline said fuel cost it $655 million more in the third quarter than a year earlier — as fuel prices rose 37%. And disruptions from Hurricane Florence cost it another $30 million.

But Delta’s profit was still up $127 million in the quarter. That’s because the average amount paid by passengers to fly each mile rose by 4%, and the number of miles traveled by paying customers also rose 4%. Together that lifted sales by $892 million, offsetting the hit from fuel.

The airline said it expects more of the same in the final three months of the year. Fuel prices are again expected to be up 30% from a year earlier. But the airline said that fares should also be up between 3% to 5% from last year.

Delta is the first major US airline to report its third-quarter finances and is something a bellwether for the industry. The fare results and guidance were particularly good news for airline investors, if not for passengers.

Shares of Delta (DAL) rose 4% Thrusday and the report and shares of industry leader American Airlines (AAL) were also higher. Most of the other major airline stocks were little changed.